Driving change with shareholder democracy and proxy voting 

The scope of shareholder activism is broadening, with ESG an essential focus. In order to maintain their social licence, companies are increasingly committed to acting in the long term benefit of all stakeholders, with proxy voting offering a voice to shareholders. But as a powerful tool for influencing a company’s governance and business practices, and a core part of fiduciary duty for asset managers, we feel the full potential of proxy voting is mostly being underleveraged. 

SI Engage addresses this by offering a full engagement management package, seamlessly linking proxy voting activity through Institutional Shareholder Services (ISS) to engagements. This enables institutional investors to better record, monitor performance, and report to stakeholders, serving as a vital component in helping our clients reach all-important ESG goals.

Active ownership: on the agenda

Last month ISS released results of its Annual Global Benchmark Policy Survey, which is expected to inform policy changes for the upcoming 2023 proxy season. A large portion of this year’s survey focuses on climate change risk management, including related disclosures and risks globally. Survey respondents fell into two categories: investors, comprising primarily of asset managers, and non-investors, comprising primarily of public corporations. Interestingly, the survey saw responses from investors rise by 29%, suggesting an increasing interest in ESG topics broadly.

In a bid to offer more choice to investors as to how they participate in the voting process for their index holdings, both Blackrock and Vanguard have recently announced they will pilot expanded proxy voting programmes. 

Additionally, The Securities and Exchange Commission (SEC) has adopted rules to enhance proxy voting, aiming to make records more usable and easier to analyse, and improving investors’ ability to monitor how their funds vote and compare different funds’ voting records.

Proxy voting for asset managers

When engaging with companies and making requests for change, asset managers are essentially back seat passengers making suggestions on what road to take and how to travel. The company (or driver) will still choose the path and method of travel, deciding whether or not to ignore the passenger or heed their advice.

By actively voting as shareholders, asset managers are putting their hand on the steering wheel, helping to guide companies down a road that is inline with their own goals and investment processes.

Although bottom lines and roadmaps may allude to a future strength in share price, it’s important that the road taken is one that is good for the future of the human race and is sustainable for our planet.

Integrating engagement data with voting data in SI Engage allows asset managers to give investors a more complete picture and chronology of committed activity to these goals.

Transparency and accountability

As part of an evolution towards multi-stakeholder capitalism, and amidst tightening ESG regulations, proxy voting hosted by a central, efficient and transparent ecosystem is an important part of risk mitigation and ultimate business success. As we face a perfect storm of environmental and social crises, there really has never been a better time for companies – and those they invest in – to harness proxy voting for driving the positive changes so urgently needed. 

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